An audacious plan gives birth to the Fonds

In the early 1980s, Canada was in deep economic recession — “a terrible crisis,” according to Jacques Parizeau, who was Quebec finance minister at the time. The unemployment rate had climbed to 12.9 per cent, the highest since the Depression; the banks’ prime rate for their best customers had soared to 22.75 per cent; and it seemed that there were more For Sale signs on residential streets than trees.

Making conditions even worse in Quebec was its sorry re­cord of labour relations, with the province leading the country in strikes and lockouts, many of them violent.

Out of this mess stepped Louis Lab­erge, president of the Fédération des travailleurs et travailleuses du Québec (FTQ), the province’s largest labour or­ganization whose members were of­ten on the picket lines and often at the centre of violence on the picket lines — both on the giving and receiving ends.

He proposed an audacious plan — called the Fonds de solidarité FTQ — to make capitalists out of blue-collar work­ers by allowing them to save in registered retirement savings plans (RRSPs) with the money being invested in small and medium-sized companies in Quebec.

“People laughed at him when he said the fund would reach $100 million in 10 years,” FTQ president Michel Ar­senault recalled.

But this year, on the 30th anniver­sary of its founding in 1983, there is no denying that the Fonds de solidarité FTQ has met with astonishing success far beyond the dreams of its founder.

The Fonds is heading for the $9-bil­lion mark in terms of assets and it has had a profound impact on the Quebec economy, including a steep reduction in the number of strikes and lockouts in conjunction with legislation prohibit­ing companies from using replacement workers — called the anti-scab law by Parizeau and many other Quebecers.

The FTQ was involved in exactly zero conflicts at the end of 2012 with cooperation between owners and em­ployees replacing confrontation.

The Fonds has 600,000 shareholder-owners; has created, maintained or pro­tected close to half a million jobs; and has invested in more than 2,200 companies.

Most are small and medium-sized businesses, which are job-creation ma­chines, across the province. The Fonds has also invested in some mighty big enterprises such as transportation and aerospace giant Bombardier Inc., major real-estate developments such as the Tour des Canadiens, which has just add­ed two storeys to keep up with demand, and the increasingly popular Montreal Impact of Major League Soccer.

They undergo a rigorous and thor­ough selection process by multi-dis­ciplinary investment teams which in­clude specialists in tax, labour relations and business valuation. It’s a process formalized by the Fonds’ chief execu­tive officer, Yvon Bolduc.

Such management strategies in­troduced by Bolduc, who was named Quebec’s MBA of the year in 2011 for “significant contributions to Quebec’s economic development,” and others have served to bring the Fonds into step with the business world.

“In a sense, it was a sort of a revolu­tion of the workers — workers financing their own companies,” Parizeau said in a recent interview. “It was unheard of, par­ticularly in the atmosphere at that time.”

The proposal put forward by Laberge was not a stretch for Parizeau, who always had a keen eye for financial innovation. He had already changed the economic land­scape of Quebec as a key figure in estab­lishing the Caisse de dépot, which invests the pension contributions of Quebecers, and conceived the Quebec Stock Savings Plan, which persuaded tens of thousands of taxpayers to invest in the stock market for the first time by buying shares in com­panies based in the province.

He was receptive to Laberge and went ahead with setting up the legis­lation providing a tax credit for shares purchased in an RRSP.

Laberge also persuaded the federal government of Brian Mulroney, an old friend, to get on board with the same tax credit.

The Fonds, however, needed more than legislation to get going and Lab­erge managed to charm the federal and provincial governments into coughing up $10 million each as seed money to pay for analysts and economists.

“He (Laberge) came to see me at my Parliament Hill office at the end of a work­ing day,” said former prime minister Brian Mulroney. “And he laid it all out for me. I said: ‘All right, I like the idea. It can create a lot of jobs. I’ll be happy to do what needs to be done to change the tax code.’ I in­structed the minister of finance (Michael Wilson) to put it into his next budget.

“On the way out the door, he (Lab­erge) turned to me and said: ‘By the way, Prime Minister, we don’t have any mon­ey.’ I said: ‘Join the club.’

“He asked for $10 million and we shook hands on it,” Mulroney recounted in a recent phone interview. Thus was born the Fonds de solidarité FTQ.